4 Great Ways to Improve Your Credit Score

A man checking his credit score on a tablet.

Although it may only be three little digits, your credit score can have a big impact on your financial life.Ranging from 300 – 850, this score represents the likelihood that you will repay a loan on time. A score of 750 or higher indicates excellent credit, while a score below 600 is considered bad credit.2 Your credit score is derived from your credit report, which is a detailed history of your credit information that includes balances and any delinquent payments or bankruptcies.3

Unsurprisingly, having a low credit score makes it harder to secure a loan or get a credit card. Additionally, those with bad credit can be whacked with higher premiums for their vehicle or homeowners insurance. Even prospective employers can access your credit score and weigh this information as you are being considered for a position.As you can see, your credit score is like your reputation in that it can precede you at important junctures in your life.

The good news is that there are a number of steps you can take to bolster your credit score over time. Tennessee State Bank has put together a convenient guide to improving your score.

1. Check for Errors in Your Credit ReportA credit report.

A study conducted by the Federal Trade Commission in 2012 found that 1 in 5 consumers had an error on at least one of their credit reports.5 An unresolved error in your credit report can negatively impact your credit score, so it is imperative that mistakes are detected and corrected as soon as possible. To see your reports from the three major credit bureaus (Experian, Equifax, and TransUnion), visit AnnualCreditReport.com. Under the Fair Credit Reporting Act, you are entitled to a free copy of all three reports once a year.6

2. Set up Automatic Bill Payments

The best thing you can do for your credit score is to consistently pay your bills on time. Your credit report doesn’t just analyze your credit card and loan payments, but also your payments for phone bills, utilities, and other recurring charges. The easiest way to ensure that you always pay your monthly expenses is by setting up automatic payments or calendar reminders. If you are behind on any payments, try to bring them up to date as soon as you can.7

A woman using a credit card in a grocery store.3. Maintain a Good Balance-to-Limit Ratio

Your balance-to-limit ratio, also known as your utilization rate, is determined by dividing your total credit card balances by your total available credit.8 A ratio of 30 percent or lower is ideal for a healthy credit score.9 Lenders seek borrowers with low ratios because they indicate that you know how to manage your credit and haven’t maxed out your cards. To maintain a good utilization rate, keep your credit card balances low and pay off any debt you may have. Becoming an authorized user on a responsible person’s account is another way to improve your ratio.10

4. Be Smart About Applying for Credit

Taking on large amounts of debt at once is considered a sign of high credit risk. For this reason, make sure that you don’t apply for multiple accounts within a short period of time. Experts recommend only applying for credit when you need it and only in the amount you require. Remember, you don’t have to accept every credit offer that comes your way.11

About Tennessee State BankA credit card with the Tennessee State Bank logo.

Tennessee State Bank has been serving our local community for over 45 years. With branches in Sevier County, Knox County, Cocke County, and Jefferson County, we offer convenient banking services in East Tennessee. Whether you’re looking to open a checking account, obtain an auto loan, or apply for a home mortgage, we make the process as simple and straightforward as possible. Tennessee State Bank’s motto is “Banking at its Best!”SM, and we strive to live up to that creed every day. Let us know how we can help you by sending us a message via our Contact Form.

 

Tennessee State Bank is Member FDIC and an Equal Housing Lender.
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References
1. “Importance of Credit History.” America Saves, americasaves.org/for-savers/debt-and-credit/importance-of-credit-history.
2. Geldis, Kali. “11 Ways to Improve Your Credit Score.” Credit.com, 11 Apr. 2018, https://www.credit.com/credit-repair/how-to-improve-credit-score/.
3. Vohwinkle, Jeremy. “Why Your Credit Score Is Important.” The Balance, 9 Mar. 2018, www.thebalance.com/the-importance-of-your-credit-score-1289630.
4. Vohwinkle, Jeremy. “Why Your Credit Score Is Important.” The Balance, 9 Mar. 2018, www.thebalance.com/the-importance-of-your-credit-score-1289630.
5. Geldis, Kali. “11 Ways to Improve Your Credit Score.” Credit.com, 11 Apr. 2018, https://www.credit.com/credit-repair/how-to-improve-credit-score/.
6. Geldis, Kali. “11 Ways to Improve Your Credit Score.” Credit.com, 11 Apr. 2018, https://www.credit.com/credit-repair/how-to-improve-credit-score/.
7. “How to Improve Your Credit Score.” Experian, www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/.
8. “How to Improve Your Credit Score.” Experian, www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/.
9. Dratch, Dana. “7 ways to improve your credit score.” Bankrate, 10 Nov. 2017, www.bankrate.com/finance/debt/7-simple-ways-improve-credit-score-1.aspx.
10. “How to Improve Your Credit Score.” Experian, www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/.
11. “Importance of Credit History.” America Saves, americasaves.org/for-savers/debt-and-credit/importance-of-credit-history.